This simple answer is “Yes!” But it would be a pretty boring article if it ended after those five words. Here’s a better question:
Why can my fully comp car insurance quote be cheaper than third party?
Before you start picking the individual quotes apart to see what’s different, it’s probably best to understand a little about how your typical car insurance firm sees you, the driver, and how you fit into its customer profile.
Car insurance is like any other (successful) business: it has a profile, a target audience, other KPIs and stakeholders in its profitability.
Believe it or not, these companies are not created just to give you the cheapest car insurance once a year when you need to renew. Sorry to break it to you so harshly, but that’s the truth of it.
Moving that thought forward (quickly), there are two factors that they all adhere to, one direct, one indirect: directly, their profitability model; indirectly, their underwriters.
Both of those, however, directly affect how much cash you have to part with each and every year to drive legally on the UK’s roads.
Who calculates drivers risk?
The people who actually work out risk are called actuaries. Underwriters will assess each driver profile and align it with a risk factor accordingly.
For example, a semi-retired gent who only uses his car to travel two miles to work twice a week in a rural backwater will be interpreted as a lot lower risk than a teenager living in an inner city suburb.
The price you’re quoted will directly reflect the underwriters’ assessment of each risk category. Bear in mind that while there is a common theme, not all underwriters judge similar groups with an equally critical eye.
Who sets a car insurance company’s prices?
In addition to any fluctuation underwriters may advise, your insurer will also have its own idea of the profitability of the market – the mark up it believes it can get from each sector – and will also have an idea which sectors suit its strengths.
The typical example here is Admiral, who’ve done wonderfully well to capture a large percentage of the multiple driver car insurance market. Conversely, other companies may want to focus on young drivers, others senior citizens, etc.
What all car insurance companies do have in common is that they will quote you on pretty much any category your driver profile fits. That’s where the variation in price kicks in.
You may approach three online car insurance companies for quotes on all three types of cover:
- third party
- third party fire and theft
- fully comprehensive
What you may well find is that one of them returns the fully comp car insurance price cheaper than its third party offer. It’s (probably) not a mistake.
In circumstances like this, you’ll find that the respective underwriters take a very dim view of drivers who only want third party car insurance.
You may well want third party cover for a legitimate reason – if it’s an old car, you have points on your license or you’re a young driver, for example.
However, to the underwriter, all of those factors may spell RISK in capital letters.
As such, you’ll find the insurer pricing itself out of the market for third party, but offering extremely good deals on fully comp and, yes, even coming in cheaper than the lesser cover.
That’s why it’s imperative that you compare car insurance prices online every time you renew your cover.
You have no way of knowing what your existing provider’s profitability policy is, let alone their underwriter’s view on risk.
So why not stop paying through the nose for third party cover now when fully comp could deliver an instant saving you thought unlikely in your situation?